The dividend trade is crowded, with almost every investor on the hunt for high yields. Wells Fargo analysts, however, say companies may only now be catching on to how investors are selecting stocks based on dividends. Dividend-paying U.S. shares have been a favorite for investors following a 20% decline in stock market indices late last year. With economic growth expected to plod along and interest rates likely to remain incredibly low, investors have been forced to look for yield and steady income in other places.
"Companies may be only just beginning to catch on to the fact that investors are keenly interested in dividend paying stocks, for while dividends are increasing, payout ratios are at an all-time low," Adams writes. "Dividends still have plenty of room to grow."